Many of the troubles that arise from a tenant voiding the rental contract prematurely have to do with poor planning on the landlord’s part.
Even if the landlord is the one who moves to terminate the contract, there are certain steps you need to establish and follow to make the process as smooth and painless as possible.
This will help you chart a clear and fair set of processes that will lessen the stress that comes with breaking out of a lease.
Below are some stipulations you should consider:
1. One of the most common clauses would be to request for a security deposit of an additional month.
The deposit would be used as compensation for any damages the tenant may cause to the apartment.
However, add a stipulation that state the deposit will be forfeited should the lease be broken if the tenant does not follow the breaking of the lease process.
This penalty acts as a deterrent. Most tenants will be okay with this and you can more or less guarantee that the tenant won’t pack up and disappear overnight.
If they do, you’ll have a few months deposit money to tide you over as you find a replacement.
After this have been established, set clear guidelines for breaking of the contract.
2. Do you need one or two months notice? Do you require the tenant to find a replacement? Do you need them to hand over anything? Do you need an inventory check?
Your needs depend on your property and how you’ve charted your rental business. However, you should have some variation between a local and foreign tenant.
A foreign tenant is far more likely to terminate the contract than a local one. He is also more likely to encounter a situation where he has to move suddenly and quickly within the month.
In such an event, it is impossible for you to insist on two months, let alone a month’s notice. Even finding a tenant to replace him in such a short time is going to be difficult.
Make some concessions to accommodate this if required. A ‘diplomatic clause’ is a common agreement that is included in the lease contract.
This is no way suggests that local tenants will not give you this problem. It is just less common. Furthermore, you’ll be able to locate the local tenant or a family member easier than a foreigner who could very well fly elsewhere and quite literally disappear.
The common minimum notice period is 30 days or one month.
3. As you’ll need to cover the costs between his absence and when you finally get a replacement, you may need to negotiate on a ‘contract buyout’ instead.
This could be as simple as keeping the security deposit to cover yourself.
During the interview process when you get to know the potential tenant, you’ll learn about what he does and how frequently he travels. From there, you can determine if a one or two month deposit is required.
In some cases, landlords demand the tenant to pay the full rental amount leading up to the expiration of the contract.
It may sound like a tempting thing to do but as you are contractually obligated to include this stipulation in the contract, you’ll probably not attract many tenants with that.
Be upfront with your potential tenant. Find out what the likelihood of him having to terminate his contract prematurely is. Establish the parameters for breaking the lease and explain the security deposit being withheld.
Most importantly, agree on the amount he’ll need to pay.
Whatever you do, be completely honest. If you change the details on a whim, not only will you break the trust with your tenant but it opens you up to legal problems.
4. If you are the one breaking the lease for whatever reason, your tenant must not be made to pay for it.
It is your responsibility as the landlord to make any sudden changes to the property or the contract be as painless for the tenant as possible.
Your tenant cannot be made to pay for this breach of contract. Nor can you demand the tenant pay you the remaining amount or hold the security deposit if you require him to leave the premises.
You must return all security deposits to the tenant and inform him well ahead of time (minimum 30 days) of his need to move.
Rent can be collected up to the last month and calculated to accommodate any additional days but no more than that.
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Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.